During the early European session on Thursday, the USD/CHF pair surged higher to near 0.9060, with the US Dollar (USD) gaining traction against the Swiss Franc (CHF). This upward movement is attributed to heightened risk aversion among traders ahead of key economic releases from the United States (US).
Market participants are adopting a cautious stance in anticipation of the Gross Domestic Product Annualized and Initial Jobless Claims data scheduled for release on Thursday, along with the forthcoming reveal of Personal Consumption Expenditures on Friday.
The US Dollar Index (DXY) climbed to near 104.50, supported by higher 2-year and 10-year yields on US coupon bonds, which stood at 4.61% and 4.20%, respectively, at the time of reporting. However, uncertainty prevails in the market due to conflicting views among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing.
Federal Reserve Board Governor Christopher Waller and Atlanta Fed President Raphael Bostic advocate for a cautious approach toward rate cuts, emphasizing the importance of considering persistent inflation data and warning against premature reductions that could exacerbate economic disruptions.
Meanwhile, in other developments, the ZEW Survey – Expectations increased by 1.3 points in March to reach 11.5, marking the highest level since October 2021. This rise was supported by the Swiss National Bank’s decision to lower its interest rate by 25 basis points to 1.5%. Consequently, the Swiss Franc (CHF) weakened further year-to-date, as the SNB‘s move is expected to exert downward pressure on the currency, making it the first G10 central bank to implement such a cut.
However, according to the KOF Swiss Economic Institute, Switzerland’s leading KOF economic barometer declined to 101.5 points in March from a revised 102.0 points in February. This indicator provides valuable insights into the anticipated performance of the Swiss economy approximately six months ahead, suggesting potential challenges on the horizon.
